The $7,750,000 was to be pro-rated among the holders of the debt reported to be within the provisions of the act of September 9, 1850, by Secretary Corwin and Attorney General Cushing. Thus the difference of opinion between these officials was done away with. The items and the par and scaled amounts of the revenue debt with interest to July 1, 1850, were as follows :3

The question of acceptance or rejection of the proposal of debt payment contained in this act was submitted to the voters of Texas in the general election of 1854. There were 11,609 votes in favor of acceptance and 13,818 against. Though the question was one of great importance to the state, only 25,427 out of over 45,000 who voted in the election expressed themselves as to the proposition submitted.1

1 Ibid., pp. 853, 863.

2 Ibid., p. 990. For act see U. S. Statutes at Large, X, ch. 129.

3 Report of the Comptroller, 1854-5.

According to the provisions of the act acceptance or rejection was lodged with the, legislature, and though the vote of the people was adverse to acceptance, the legislature gave the question independent consideration. Within the legislature the contest was stubborn as to the decision which should be made. The arguments advanced in favor of acceptance were chiefly. first, that no reasonable hope could be entertained that the debt would ever be settled under the terms of the Boundary Act or of the act of Texas of January 31, 1852, because Texas would not accept the national government's construction of the Boundary Act and the creditors would not accept the scaled rates adopted in the Texas act; second, that Texas alone could not prescribe the terms on which the debt should be settled, because in consenting to the Boundary Act she thereby admitted the participation of the United States; and, third, that it was important that the "troublesome business should be settled upon terms satisfactory to the creditors."2

The arguments against acceptance ,were, first, that Texas had the right to transact her financial affairs in her own way; second, that acceptance would be in the interest of the "greedy foreign speculator"; and, third, that there would be a financial loss to the state to accept this act in lieu of the Boundary Act.3 The minority report of the house committee on public debt figured a total loss to the state by acceptance of $6,082,244. This sum was arrived at by adding to the $5,000,000 in bonds reserved in the United States Treasury the accumulated interest to January 1, 1855, of $1,250,000; premiums of $500,000 on the bonds; and Indian claims of $3,800,000; and subtracting from the total of $11,550,000 the amount of the revenue debt sealed which according to their statement was $4,467,756. This financial loss to the state was the principal basis of the opposition. The bill passed and became the act of February 1, 1856.1 The bill passed the house by the very close vote of 42 to 38.

1 Message of Governor Pease, November 5, 1855.

2 Message of Governor Pease, November 5, 1855. Majority Report of House Committee on Public Debt, December 1, 1855; House Journal, 6th Leg., p. 141. Galveston Weekly News, May 12, 1855, and January 15, 1856.

3 Minority Report of the House Committee on Public Debt, December 1, 1855; House Journal, 6th Leg., p. 151. The Texas State Gazette, May 19, June 30, and November 10, 1855. See also the Galveston Weekly News, December 18, 1855, and June 8, 1856.

It was charged both in Congress and in the legislature of Texas that some members of each body had a financial interest in the passage of the bill. When the vote on the House bill was about to be taken in Congress, the rule of the House in regard to members voting upon a question in which they had a direct interest was ordered read.2 In the legislature a committee was appointed to investigate the charges of improper conduct on the part of members of the legislature, but the report was that no facts brought before it justified the charge that bribery was employed. An attempt was thereupon made to have the committee itself investigated, but it failed.3

The $7,750,000 prorated among the holders of the $10,078,703 revenue debt gave each creditor about seventy-six and nine-tenths cents on the dollar. This settlement was very acceptable to the majority of the creditors. Settlement on the basis of the Texas ratings, which varied from twenty cents on the dollar to par, would have been a severe blow to those who had purchased the securities as a speculation. The securities were held mainly outside the state - in Delaware. Kentucky, Pennsylvania, and South Carolina.4 In 1850 in Philadelphia ten per cent interest notes were quoted at forty cents on the dollar and non-interest notes at from twenty-four and one-quarter cents to twenty-four and three-quarter cents. Eight per cent treasury bonds were quoted at thirty-five cents on the dollar, and a block of 45,000 of the bonds changed hands at that price.5

In the adjustment proposed by Texas in the act of 1852 there were three items of debt which were rated higher by $123,217.56 than they were settled for by the United States under the act of 1855. When the question of settlement was under consideration in Congress this difference was noted as an objection to the passage of the act of 1855, and to obviate it a provision was incorporated in the bill which authorized the Secretary of the Treasury to repay to Texas on the pro-rata basis out of the fund of $7,750,000, the amount of the revenue debt which had been paid by the state. It was thought that the repayment would enable the state to pay to the creditors the $123,217.56 which they would lose by acceptance of the act of 1855.1 The state received in 1856-7 from the United States $300,450.01 which was the amount that creditors had received from the state in payment of $997,042.90 of revenue debt, that amount being at the rate of thirty cents on the dollar.2 These creditors received from the United States out of the fund of $7,750,000 the amount necessary to bring the settlement to the basis of seventy-six and nine-tenths cents on the dollar. But those creditors who had lost $124,217.56 by the acceptance of the act of 1855 were never reimbursed by Texas. Certain holders of the non-revenue debt, however, were compensated by the state for the difference between the scaled and par amounts of their debts.3 The amount paid to them was $57,768.82.4

1 Laws of 1856, p. 47.

2 Congressional Globe, vol. 30, pt. 1, p. 618. See also the speech of BIT. Giddings, of Ohio; ibid., p. 598.

3 House Journal, 6th Leg., Adj. Sess., pp. 314, 506-522, 554. Galveston Weekly News, August 12, 1856.

4 House Misc. Doc. No. 17, 33d Cong., 2nd Sess. 5The Texas State Gazette, April 13, 1850.